As you may know purchasing real estate is already really expensive and closing costs can add thousands of dollars to your purchase price. Closing costs should really be considered first before planning your real estate search. In this video I will show you the 12 closing costs you should expect and the estimated costs of each.
#1 the Appraisal fees - Before your lender approves your mortgage, you may be required to have the property appraised. Sometimes your lender will cover this cost. If not, you're responsible. The fee ranges from $300 to $450 plus GST.
#2 the Land survey fees - Lenders may require a survey of the property. This is usually when you purchase a detached home. The fee ranges and is typically $500 plus GST.
#3 Home inspection fees- A home inspection is a report on the condition of the home and includes structural and moisture problems, as well as electrical, plumbing, roofing and insulation. The fees range and is typically $500-$900 depending on the size of the home and the complexity of the inspection. Some inspectors also charge an additional fee for an older home or a home with a secondary suite, a crawlspace, or a laneway home. Check out the cards here on how to find a good home inspector.
#4 GST, Expect to pay 5% GST on all brand new homes with a purchase price of over $450,000.
#5 Property Transfer Tax - which is calculated at 1% of the first 200k and 2% on the balance up to 2million, and 3% on the amount over 2 million.
Qualifying first-time home buyers may be exempt from paying the PTT if the purchase price of their home is priced up to $475,000. There is a proportional exemption for homes priced between $475,000 and $500,000. At $500,000 and above the rebate is Zero
Qualifying buyers of new homes may be exempt if the purchase price of their home is priced up to $750,000. There is a proportional exemption for homes priced between $750,000 and $800,000. At $800,000 and above there's no rebate.
#6 Foreign Buyers Tax - This is an extra 20% applied onto your purchase price of your home if you are not a citizen of BC or a Permanent resident.
#7 Mortgage insurance
The federal government requires high-ratio mortgages with less than 20% down payment to be insured against default. The cost ranges between 0.60 to 4.5 %of the mortgage amount which is added to the mortgage principal. As of February 15, 2016, the federal government requires a 10 per cent down payment requirement on homes valued at $500,000 - $1 million, that need mortgage insurance. Homes valued at $1 million+ require a minimum down payment of 20 per cent. Mortgage insurance is not available for homes in this price range
#8 Mortgage life insurance
If the owner dies, this type of insurance will pay off the balance owing on their mortgage. You can purchase mortgage insurance from your lender or term life insurance.
#9 Home insurance
Most lenders require property buyers to carry fire and extended coverage insurance and liability insurance. I would recommend that your insurance also cover water damage. As one small water leak can cause up more than $50,000 worth in damages.
#10 Moving fees
Moving fees vary depending on the distance moved and whether professional movers do all of the packing. Rates vary.
Depending on the Contract of Purchase and Sale, a property buyer will likely be required to reimburse the seller for any prepaid property taxes. The lender may require the buyer to add property tax instalments to monthly mortgage payments. Utility bills, A buyer is typically required to reimburse the seller for any prepayments for municipal sewer and water fees.
Rent and security deposits - If you are purchasing a tenant occupied property and the tenancy continues, the buyer receives the security deposit from the seller with accrued interest because the buyer is responsible for reimbursement when the tenant leaves.
#12 - The Lawyer or notary fee, this fee is necessary as they are the ones that process the paperwork at the land title office and transfer your money to the sellers lawyer. Expect to pay about $1000 for their services.
So thats it, the 12 closing costs here in Vancouver, if you are interested in viewing my buyers video please click the playlist in the description below or on top in the cards.
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